I know we have a few American posters. What’s it like living with all this?
Have you noticed changes in behaviours in terms of spending etc?
Distressing, and no…but that doesn’t mean it’s not true!
If 330M people make a small change (“I’m going to save/not spend $100 this month”), that’s a $33,000,000,000 change in spending! However, what many people think us that some big ticket spending has been brought forward due to the threat of tariffs creating much higher prices, so we haven’t really seen the effects of that yet.
EVERYTHING in the American economy right now feels like it’s tied to TWO THINGS:
China tariffs
Federal Reserve Interest Rate decisions
If either one moves in the “wrong” direction, we see the Stock Market react violently and people suggesting the sky is falling.
However, Trump is hoping that he can change the mentality of the markets enough to get the Fed to lower interest rates, WITHOUT jawboning us into recession. He’s getting plenty of help from the MAGAts on Wall Street who are doing his cheerleading for him in public and on TV, but Jerome Powell hasn’t fallen for it YET!
The pressure is increasing as tariff threats (and reality) start to hit the economy.
Once Trump gets his interest rate cuts, the equity market will explode to the upside, and short term rates will fall, dragging longer term rates with them. That last part is the great unknown and the scary part, as that’s what is tied to consumer interest rates (mortgages, credit cards, car loans) and, in large part, what costs us a $1T annually just to service.